Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; connected lender liability under section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr P and Mrs R complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting section 75 claims relating to their purchase of Fractional Club timeshare membership in February 2014. The complainants financed £4,000 of the £18,480 purchase price through the lender and alleged the supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, failed to conduct proper affordability checks, and that undisclosed commission of £320 rendered the relationship unfair. The ombudsman found that the complainants' primary motivation was to exit their existing timeshare after 15 years rather than to profit from the allocated property share, making any breach of Regulation 14(3) immaterial to their decision. The modest commission and affordable lending did not render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A, considering whether any breaches of regulation or misrepresentations were material to the complainants' decision to purchase. The key finding was that Mr P and Mrs R's primary motivation was to exit their existing timeshare membership after 15 years rather than to make a financial profit from the allocated property share. Even if the supplier breached Regulation 14(3) by marketing the product as an investment, this breach was not causative of the purchase decision. The commission of £320 was modest (8% of borrowing) compared to the Supreme Court's guidance on high commissions, and the lending was affordable. Regulatory breaches do not automatically create unfairness under section 140A; their impact must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website